WEEKLY TRENDSETTER (FEBRUARY 27TH ,2021)
| 2021 | Feb 19th | Feb 27th | Ch % |
| NIFTY | 14982 | 14529 | -3.02 |
| BANK NIFTY | 35841 | 34803 | -2.89 |
| USD/INR | 72.51 | 73.91 | -1.89 |
The week saw some serious correction in the markets and the closing indicated that the selling pressure could continue.The primary reason for the correction was cited to be a sharp spike in banking yields in US and even in India bond yields have hardened which could possibly signal that the interest rate cycle has bottomed out .Equity markets world over could see overhang of this over the next few weeks .The correction should be seen as healthy considering the sharp rise in markets in the past few months.
BIG PLAYERS ACTIVITIES
The FII s turned sellers while DII s turned buyers towards end of week..
ENTRY OF STRONG PROMOTER STRONG SIGNALS FOR RE-RATING IN CG Power
About 3 years back C.G.Power which was under the erstwhile Thapar group saw some irregularities which took toll of the financials of the company .The stock witnessed a sharp sell off from 90 to 5 by March 20 .Subsequently ,the company saw the entry of Murugappa group which infused Rs 700 cr into the company .Tube Investment(TII),a group company was issued 64.25 cr shares of Rs 2 -paid up at Rs 8.56 per share aggregating Rs 500 cr besides 1.52 cr warrants exercisable within 18 months for Rs 150 cr.
The company is engaged in design,manufacturing and marketing of products relating to power generation,transmission and distribution.The power sector is buzzing with activity and with a revamp in transmission and distribution to make it more efficient and profitable ,there is immense scope for the company to participate in the opportunity.Besides there is scope for it to participate in the Railways segment as well which is also on a revamp mode .
While its still early days and expectations are already high ,the entry of the Murugappa group could see corporate governance improving and also strong infusion of cash from time to time to enable the company to participate in exciting and profitable opportunities .Clearly a a stock for the future !!
Some results which caught the eye are featured below: –
| Company | Revenue | Net profit |
| Indraprastha Medical | 180(+27.6) | +12(+999) |
| Hind Copper | 538(+82.7) | 108(+999) |
| TVS Electronics | 62.5(+3.1) | 4.1(+635) |
Rs in cr (Figures in bracket indicates change in %)
Indraprastha Medical – After two sluggish quarters the company has returned to profitability aided by resurgence in revenue .The healthcare sector has seen some interest in the last few quarters following the Covid pandemic and with medical infrastructure levels offering immense growth potential ,the company could see its fortunes improving as it has also been attracting medical tourists from abroad.
Hind Copper-The company was a big beneficiary of the jump in copper prices which saw the bottomline surging .Copper prices are expected to remain buoyant and with the company’s plans to increase capacities ,this could keep it in limelight .
TVS Electronics -The company has an interesting product mix.While product solutions business, transaction automation product peripheral hardware contributes 35%, 65% is being contributed by the Dot Matrix Printer, keyboard and related supplies. Apart from addressing the IT services segment, the company has a strong presence in the mobile/ handheld segment, consumer electronics and the banking segment.While the segments are sunrise in nature ,the company’s performance has been below expectations with slender margins.The Dec quarter has raised hopes and the EPS stands at 2.2 for the quarter which looks encouraging .
WHAT DOES THE COMING WEEK HOLD?
1.Auto numbers will be keenly watched for the Feb month which will confirm if the past 2 months upward trend is maintained.
2.The market will react to the weaker than expected GDP growth for the Dec quarter. More worrying is the spike in crude prices and also the weakening of the rupee which was the sharpest in recent weeks. High demand for dollars could be a possible signal for pullout by FII s at least in the near term.
3.The AGR verdict spooked prospects for the two leading telcos Airtel and VI. However, a petition has been filed to review the calculation of figures which have resulted in the high demand of AGR. The petition is critical for the two telcos as any favourable judgement could considerably ease the cash position in the coming months. The liabilities have already been provided for and thus any reversal of the same would be seen as positive.
3.Last week the Nifty support was cited at 14600-700. However, the same was breached on Friday. Global sentiments have turned week. However ,14400 could be a level to be watched out. Some bounce back from those levels cannot be ruled out. Thus, the market could be weak at index levels though at broader level several counters are sizzling in action as they are largely on a recovery mode and any correction could be modest.
DID YOU KNOW
The U.S. electric vehicle maker Tesla has bought $1.5 billion worth of bitcoins and said it would accept it as a form of payment for its cars in the near future — adding to the buzz around both carmaker and cryptocurrency.
The announcement pushed bitcoin to an all-time high of above $48,000 last week. The company had $19.38 billion in cash and cash equivalents on hand as of the end of 2020.
Tesla is not the first company to add bitcoin to its balance sheet. MicroStrategy, a U.S. software company, bought $250 million worth of bitcoins in August, which are now valued at about $3.1 billion. The bet has helped to push the share price of the Nasdaq-listed company more than 800% higher.
Some stray thoughts –
Two recent acquisitions of NBFC s has set the market abuzz that more such could follow .Firstly the Piramal’s acquired the beleaguered DHFL and last week Adar Poonawalla acquired Magma Microphone of the reasons cited is that RBI is largely in favour of converting large NBFC s into banks as recently recommended by a RBI Working Committee .This comes as a boost to the sector as a whole after the IL&FS debacle followed by DHFL in 2018 .A consolidation with cash rich promoters will go a long way to capturing an underpenetrated market as potential was never in doubt .
Wishing all readers, a great trading week! Great opportunities are emerging outside the large cap space! Trade light and look out for bargain counters!
Krish Subramanyam